Building the IT Infrastructure for Accountable Care

www.pwc.com

April 11, 2014

PwC

Learning Objectives

At the end of this presentation, the participants will:

• Understand the Accountable Care Organization (ACO) construct, within the context of health care market forces

• Appreciate the key business factors and decisions which shape the operations of an ACO

• Recognize the core technology capabilities required for successful ACO management

2

PwC

A bit about us

3

Stacey Empson

Principal

Experienced healthcare executive with more than 20 years of leadership and business consulting experience in health information technology, law, and transformation. Stacey helps health systems, hospitals, physicians, payers, and integrated networks identify and execute strategic business solutions.

Previous Roles:

• Managing Director of healthcare services for a global IT services company

• CEO of an entrepreneurial healthcare management consulting firm

• Healthcare Partner at a Fortune 100 company

Sarah Kramer

PwC Director

Experienced healthcare executive with nearly two decades successfully leading substantial technology and business transformation programs at several large integrated academic and community health care systems in the US, Canada, Asia and Africa.

Previous Roles:

• CIO for several large health systems

• Interim CIO for the Aga Kahn University and Health System in Pakistan and East Africa

• Led large Epic installation at a nationally recognized academic health system in southern California

Stacey Empson

PwC Partner

PwC

Agenda

1. ACOs within the new health economy

2. Business drivers/considerations for successful ACO operations

3. Technology as the backbone, enabler and differentiator

4. Summary/Key Takeaways

4

PwC

1. ACOs within the new health economy

5

PwC

The old model: Funds flow

Healthcare was primarily financed by employers and government, who funneled most of the money through health insurance plans.

Consumers paid relatively little out of pocket and were generally unaware of the cost of services they received

Employers

Government

Health insurers

Physicians Hospitals

Pharma

Life Sciences

Medical devices

More services = More money

Consumers

6

PwC

A new health economy: Altered funds flow

Consumers

Employers

Government

Health insurers

Physicians Hospitals

Pharma

Life Sciences

Med. devices

Cu

sto

me

rs

Risk-bearing entities, e.g. ACOs

Alternative health,

wellness, prevention

Employers and government are contracting more directly with care providers. New regulations put providers at financial risk for the quality of care they deliver.

Consumers will pay for a larger portion of the care through deductibles and copays, and will be more aware of the costs. They will want better value for their healthcare dollars, a greater decision-making role, and a wider variety of treatment alternatives.

7

PwC

Other industries have undergone similar changes to those anticipated in Health

8

Travel

Banking

Retail

–

1980s (Industry Centric)

Present (Consumer Centric)

Bank Teller

• Banker’s hours

• Branch only

ATMs, Mobile Banking

• Available 24/7

• Location agnostic

Travel Agency

• Limited Hours

• Limited Locations

• Annual Updates

Standardized Marketing and Inventory

• National campaigns

• Sunday Circulars

Online Booking

• On-demand booking

• Location agnostic

• Real time pricing

Customized

• Website, location specific

• Data-driven targeted promotions

PwC

Just like other industries have evolved to be more consumer centric, the future of healthcare is headed toward personalized care

9

Present Physician office, Hospitals,

Pharmacy

Future Personalization

• Set hours & locations

• Standardized treatment plans

• Queue for care

• Individualized services, treatments, and drug protocols

1980s Physician office, Hospitals,

Pharmacy

• Set hours & locations

• Standardized treatment plans

• Queue for care

PwC

This new health economy will require some different areas of focus for traditional health providers…

• Exploit new technologies e.g., predictive, biometic,

genomic

• Convert volumes of data into meaningful insights & useful

information

• Shift from volume to value/quality incentives

• More efficiency, lower costs

• Commercialize core competencies

• Improve outcomes through research and scientific

discovery

• Pursue new relationships and partnerships

• Build a full continuum of care including prevention, virtual and wellness

• Understand, attract and retain new markets

Consumer Innovation

Smart Analytics

Operational Agility

10

PwC

Illinois area ACO dynamics

11

PwC

2. Business drivers and considerations for successful ACO operations

PwC

What is an Accountable Care Organization (ACO)?

13

An ACO is a network of providers and/or organizations that are accountable for the health of a discrete group of Medicare beneficiaries

Local network of primary care physicians

Hospitals

Specialists

Potentially other providers that accept

joint responsibility for the quality and cost

of care for a defined population of patients

PwC

ACOs pursuing IHI’s "Triple Aim" www.ihi.org/offerings/Initiatives/TripleAim

The Institute for Healthcare Improvement (IHI) believes that new designs can and must be developed to simultaneously accomplish three critical objectives, or what IHI calls the “Triple Aim”.

The "Triple Aim" is simultaneous pursuit of:

1. Enhancing the patient experience of care (including quality, access, and reliability);

2. Improving the health of the population; and

3. Reducing, or at least control, the per capita cost of care.

PwC finds that the objectives of the "Triple Aim" are pursuits successful ACO's should incorporate into their strategy, culture and operations.

14

IHI’s “Triple Aim”

Per Capita Cost

PwC

ACO Core Competencies

15

Critical Success Factors

Leadership

Governance

Integrated Clinical,

Financial and Operational Management

Infr

ast

ruct

ure

an

d I

T

Team, culture, innovation

Strategy design and execution

Incorporate clinical measures, manage compliance, align evidence-based clinical practices and financial incentives

Competency

Risk Management

Manage population financial risk

Workforce

Optimize productivity

PwC

PwC’s “ACO Maturity Continuum” – the goal is to start from where you are, and move through to level 4. Gains can be made along the continuum

16

Proposed ACO meets basic requirements to perform as an ACO and can effectively coordinate patient care.

Proposed ACO has demonstrated improved outcomes for chronic conditions and has characteristics needed to exceed basic ACO performance.

Proposed ACO has demonstrated reductions in costs and has piloted service lines and / or populations for capitated-based payments.

ACO has implemented population health and wellness programs and has the ability to predictively model population health / healthcare costs and accept capitated-based payments for patient populations.

Level 1 – Care Coordination / Transitions of Care

Level 2 – Demonstrated Quality Improvement / Excellence (Chronic

Disease Management)

Level 3 – Demonstrated Cost Improvement & Ability to Take Risk

Level 4 – Population Management (Predictive Modeling & Population

Health)

Level Capability

PwC

3. Technology as the backbone, enabler and differentiator

PwC

The evolving mission of technology

Across today’s increasingly competitive healthcare landscape, the bar has been raised for today’s technology leaders. This is even more important for entities seeking to offer both provider and payer capabilities in a crowded and competitive market.

18

Support

Technology continues to play a critical role in supporting and enabling an organization’s business strategy.

Advance

Technology resources and investments are also expected to advance the organization– developing flexible capabilities to increase effectiveness, enabling the group to grow.

Differentiate

There is an increasing expectation that technology leaders will drive innovation – adopting new technologies to differentiate the organization.

Differentiate

Advance

Efficiency

Support

Inn

ov

ati

on

PwC

Assessment Methodology – IHI’s "Triple Aim" www.ihi.org/offerings/Initiatives/TripleAim

Technology:

• Integration

• Analytics

• Collaborative patient/customer engagement tools

IHI’s “Triple Aim”

Per Capita Cost

19

PwC

Enterprise EHR: Ticket to entry

Certified, integrated, enterprise-wide EHR (MU Stage 2)

• “ERP” of the clinical enterprise

• Patient-centricity is the core of all information requirements

Now is the time to explore full optimization of functionality that often lies dormant:

• Reporting

• Access

• Transitions of Care

• MPI, Facility, Provider, User data accuracy and linkage

• Decision support

20

PwC

Integration: shared EHR and/or HIE

21

• Text goes

here

Accountable

Care

Organization

ACO professionals in group practice arrangements

Other Medicare providers and suppliers as determined by the Secretary (e.g. PBM)

Hospitals and their ACO employed professionals

Networks of individual practices of ACO professionals - e.g., an IPA

Partnerships or JVs between hospitals and ACO professionals

Fully implemented EHR across the care continuum is a base requirement

Connectivity can be achieved through HIE, and/or expanding single instance of EHR across continuum

PwC

Breakdowns in care delivery often occur at the transition between care settings

22

Successful delivery of an ACO model requires coordination of care across the healthcare continuum

PwC

Data Analytics: Better understanding of current patients, providers, outcome, cost to predict and manage proactively

23

PwC

Patient Engagement: We are seeing a renewed focus on patient engagement and population health in both payers and providers

24

Source: PwC Research

Non-linear, but time based member health

journey

Healthy

Newly Diagnosed Caregiver

Sick

Engagement needs change with the patient’s health journey

• Technology will need to adapt and support the continuum

PwC

Patient Experience: Delivering a world class patient experience leads to knock-on effects that percolate across your health system….

25

Knock-on Effects Observations Impact on your Business

Reduction in Readmission Rates

• Better patient experience associated with lower 30-day risk-standardized hospital readmission rates1

• Limit the financial burden of readmissions as CMS initiates and commercial payers pick up on value based purchasing

Amplifying Effects on Customer Loyalty

• 72% of consumers indicate that provider reputation and personal experience are the top drivers of provider choice2

• 9 out of 10 consumers are willing to recommend a provider after a good experience2

• Attract and retain your target patient and payer mix by employing targeted marketing and word of mouth based on your patient experience

Ready for the “Rising Tide”

• Hospitals measured by the CMS VBP program have shown improvements in nearly all patient experience and process off care dimensions year over year3

• The budget neutral VBP has increased competition amongst hospitals; get on board or be left behind

Source: (1) “Relationship Between Patient Satisfaction With Inpatient Care and Hospital Readmission Within 30 Days”, William Boulding et. Al., American Journal of Managed Care, January 2011, (2) PwC Experience Radar 2012, (3) CMS data

PwC

Building on technology investments enable movement up the PwC “ACO Maturity Continuum”

26

Tools to connect HIE; e-Referral

Tools to improve: Decision support, alerts, disease registries, patient portals

Tools to engage; tools to understand: Patient/customer engagement; service line oriented population management

Tools to predict: Sophisticated data analytic capacity; predictive modelling; actuarial analysis; ability to accept capitation based payments

Level 1 – Care Coordination / Transitions of Care

Level 2 – Demonstrated Quality Improvement / Excellence (Chronic

Disease Management)

Level 3 – Demonstrated Cost Improvement & Ability to Take Risk

Level 4 – Population Management (Predictive Modeling & Population

Health)

Level Tech Capability

PwC

Overarching Technology: Example Technology Assessment: ORGANIZATION’s technological readiness for population health is distant even though the organization has achieved MU accreditation

3.0

2.8 2.8 2.8

2.5

2.3

2.0 2.0 2.0

1.9

1.8

1.4 1.4

1.0 1.0 1.0 1.0

0.4

0.00.0

0.5

1.0

1.5

2.0

2.5

3.0

MU Stage 2 Clinical

Quality

Measures

MU Stage 1 Eligible

Professional

Core

Objectives

MU Stage 2 Eligible

Professional

Menu

Objectives

EHR/ EMR --Non-Clinical

Data Capture

EHR/ EMR --Electronic

Prescribing

Data Warehousing

EHR/ EMR --Clinical Data

Capture

EHR/ EMR --Clinical Data

Share

Physician Portal

Security (HIPAA)

Related to

ACO Security

Exchange

EHR/ EMR --Care

Coordination

&

Management

Patient Portal Basic Reporting

EHR/ EMR --Clinical

Intelligence

Telehealth / E-Mobility

Health Information

Exchange

(HIE)

Administrative Function (at

the ACO

Level)

Business Intelligence

Health Insurance

Exchange

(HIX)

Technology Rating by Criteria

• ORGANIZATION’s primary needs are access to “timely, actionable information” and analytics capabilities for population health management

– Access to external data (clinical, utilization, cost, quality) is very limited

– Population-level data is required to identify and target high-risk disease states and patients

• Internally, additional work is required to streamline the use of health information technology and to align technology with clinicians’ workflows

– “The EHR makes everything we do more time consuming. The system does not sufficiently flag if there are any gaps. All of the information gets buried.”

Physician

27

PwC

4. Summary/Key Takeaways

PwC

ACO Lessons Learned

• Technology/change/spend fatigue post MU achievement

• Optimize current technology assets vs. introduce new technologies

• IT operations needs to mature, including thoughtful and aligned enterprise

governance

• Build AND buy strategies required to quickly advance analytic capability

29

PwC

In Conclusion

Technology is a key enabler to ensure successful transition to a mature ACO

• EHR is the price of entry

• Integration across the continuum

• Sophisticated and predictive data analytics to manage outcomes and cost, and reduce risk

• Patient/customer engagement is the new reality

• No matter where you start on PwC’s “ACO Maturity Continuum,” achieving true population management is the goal

30

Questions?

Contact Information

This publication has been prepared for general guidance on matters of interest only, and does

not constitute professional advice. You should not act upon the information contained in this

publication without obtaining specific professional advice. No representation or warranty

(express or implied) is given as to the accuracy or completeness of the information contained

in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its

members, employees and agents do not accept or assume any liability, responsibility or duty of

care for any consequences of you or anyone else acting, or refraining to act, in reliance on the

information contained in this publication or for any decision based on it.

© 2014 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to

PricewaterhouseCoopers LLP which is a member firm of PricewaterhouseCoopers

International Limited, each member firm of which is a separate legal entity.

Stacey Empson stacey.empson@us.pwc.com 312-933-6961

Sarah Kramer sarah.kramer@us.pwc.com 310-200-9619